Question

How do different legal forms of business raise capital in developed economies?

Answer 1

Different legal forms of businesses are raising funds in developed economy as follows-

A. Proprietorship form of business will be having all the income and expenses from his own personal Assets and he can even take loans which will be personal loans in nature and personal business loans in nature because his liability will be unlimited in nature so he will not be allowed to have access to other Markets and he can only have access to personal mode of finance because his liability will be unlimited

B. Partnership form of business will be having an access to the reasing of loans and they can also issue some form of instrument in order to generate debt capital out of the market and this partnership type of form will be having unlimited liability generally so they will be all with assessed on the basis of their personal capacity and they can have access to the bank loans and the commercial loans and other newly available line of credit

Limited liability form of partnership firm is indicating limited liability on the part of partners and these businesses will have a very limited access to the market because they cannot raise much capital as the business is having a limited liability on its own behalf and partners are not liable individually.

C. Business which is in the Corporation form will be having very higher opportunity of raising capital through issuance of equity shares as well as issuance of debt instruments and it can even have access to the commercial market in form of loans so these businesses will be having the ultimate option of raising of the finances through issuance of the equity shares and it can even have expansion of opportunities also so they can issue equity shares to generate equity finance and debt instruments for debt capital and they can even have access to the private equity and institutional markets as they can raise money from the foreign markets